WCM777 Receiver proposes victim claims process

Good news for those of you who’ve been asking about claiming your losses in WCM777, with the Receiver late last week filing a proposed claims process.

Over $20 million will be returned to WCM777 victims, with the Receiver anticipating between 24,000 to 96,000 claims.

Ponzi schemes like WCM777 allow scams with a scam to take place, with many investors depositing funds directly with their uplines rather than with the company itself.

In exchange for real funds, these uplines (typically top investors), then transfer useless Ponzi points to their unsuspecting victims.

This leaves no record of funds being exchanged on the Ponzi scheme’s database or financial records, with the transfer of points the only verifiable metric.

And even then, how much was paid for the points can be disputed, unless transactions are further verified through bank account activity.

Note that the points themselves are not claimable, only the funds invested into WCM777.

This is but one of the many challenges facing the WCM777 Receiver, such that a third-party claims administrator has been brought in to assist:

The reasons for the uncertainty with regard to the estimated number of potential investor claimants are many, but primarily stem from the lack of a complete or trustworthy company database, the location of many investors outside the United States, the fact that a significant number of investors gave their money to other individuals who pooled the funds with those of other investors before investing with the Receivership Entities, and the issuance and trading of “points.”

These issues, the Receiver’s concerns with regard to the potential for fraudulent claims, and the extraordinary cost of manually reviewing thousands of claims has lead the Receiver to propose a three phase claims process using a third party claims administrator capable of automating the intake and review of claims and ultimately assisting in any distribution.

As to the claims process itself;

The first phase of the claims process will involve developing the web-based claim portal.

This first phase will largely be an automated process and is expected to result in an identifiable group of investors and other claimants, leaving the manual claims review and determination of the amount of allowed claims to phase two.

Phase two will be partially automated and partially manual.

Using the information gathered from claimants as well as data the Receiver has obtained and verified from the Receivership Entities’ records and third party sources (e.g., bank records), the Receiver and the claims administrator will work to establish proposed allowed claim amounts for each claimant, which amounts can then be used as the basis for a proposed distribution plan.

Much of the success of this proposal depends on the information submitted in victim claims. Failing that, the Receiver stipulates

if the quality or quantity of information received in phase one of the process is such that the Receiver believes phase two is not feasible (either because there is a lack of verifiable information or the cost of reviewing the claims requiring manual review exceeds expectations), then the Receiver will return to Court with an alternative proposed approach to handling claims.

The proposal is now before the court, with a hearing on the matter scheduled for July 13th.

If approved, the Receiver’s proposed schedule would see Phase 1 roll out 45 days after the date the court granted approval. Barring any unforeseen issues, the entire claims process is expected to take no longer than 180 days, with distribution payments issued thereafter.

Further information is available from the WCM777 Receivership website, under the document titles “Receiver’s Motion for Order Setting Claims Bar Date, Approving Claim Forms and Approving Engagement of Third Party Claims Administrator” and “Receiver’s Declaration re: Receiver’s Motion for Order Setting Claims Bar Date, Approving Claim Forms and Approving Engagement of Third Party Claims Administrator” (includes mock-up of proposed claim documents).